A total of 33,094 completed residential units worth RM17.78 billion remained unsold in the first half of 2026, up from 30,471 units worth RM17.73 billion in the second half of 2025, according to the National Property Information Centre (NAPIC).
The increase is particularly concerning, as the unsold stock is no longer confined to high-end properties, with significant overhang also recorded in the affordable and mid-priced segments.
Finance Minister II Datuk Seri Amir Hamzah Azizan said during the launch of the 1H2026 Property Market Report released by the Valuation and Property Services Department on Sept 10 that the property overhang is also heavily impacting the commercial segment, particularly serviced apartments.
The number of unsold, completed, serviced apartments rose to 23,375 with a total value of RM19.33 billion. Over 55 per cent of these units are priced between RM500,001 and RM1 million.
Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Zaini Yusoff said a special Home Ownership Campaign (HOC) 2027 should be introduced to help absorb existing completed residential units with a Certificate of Completion and Compliance.
He said such a campaign like the HOC could improve market liquidity by helping clear completed stock and allowing developers to recycle capital into new projects.
However, Olive Tree Property Consultants founder and chief executive officer Samuel Tan said the problem went beyond a temporary mismatch that could be resolved simply by stimulating purchases.
He said several structural factors were contributing to the persistent gap between housing supply and effective demand.
"Median household income has not kept pace with building costs, so the bulk of the new supply clusters above what "first-time-house-buyers" can afford, even as the RM300,000 and below segment is classified as "affordable" by price tag," he said.
Tan said financing remained another major obstacle, particularly for first-time buyers in the gig economy or those without fixed incomes, where difficulties in securing bank loans could prevent potential buyers from entering the market even when properties were within their nominal price range.
"Bank Negara's loan rejection rates for first-time buyers, particularly gig-economy or non-fixed-income earners, remain a structural choke point the price alone cannot fix."
The mismatch was also geographical, with overhang concentrated in particular states, locations and price segments.
He said some of the unsold stock comprised legacy developments planned during the 2012-2017 speculative cycle, including projects that had been targeted at foreign and cross-border buyers whose demand did not materialise to the extent originally anticipated.
"Overhang is heavily concentrated in specific states and price segments; much of it are legacy stocks from the 2012 to 2017 speculative wave aimed at foreign/cross-border buyers who never materialised to the expected extent," Tan said.
"Recent NAPIC data shows oversupply concentrated in high-rises, with unsold units increasingly common even in the mid-range RM200,000 to RM600,000 band. This means location, layout, and connectivity are now bigger drivers of unsold stock than price."
Tan added that this means location, layout and connectivity are now bigger drivers of unsold stock than price alone.
Another concern is the long development cycle, which can leave developers delivering homes based on demand assumptions that are several years out of date.
Tan said approval-to-completion cycles could take three to four years, meaning housing being completed today might have been planned for a very different market.
"The preferences and tastes of new buyers could have changed, rendering some of these unsold stocks unattractive," he said.
The issue is emerging despite an otherwise resilient property market.
The overall market recorded 187,320 transactions worth RM105.12 billion in the first half of 2026, while residential properties accounted for 59.3 per cent of total transactions, with 110,998 deals, according to the 1H2026 Property Market Report.
The contrasting figures point to a more complex problem: transactions remain relatively strong, but a substantial pool of completed homes is still failing to find buyers.
Tan also highlighted a significant data gap that could hamper policymakers' ability to address the affordability problem, particularly among younger Malaysians and first-time buyers.
He said current data compiled by the Statistics Department was largely classified by income group and locality rather than age, making it difficult to establish how homeownership rates vary among different generations.
Tan said without age demographics, stakeholders cannot distinguish between young people who cannot afford to buy and young people who are choosing to rent or delay homeownership.
He added that the absence of a baseline homeownership-by-age rate also makes it difficult to determine whether housing policies are actually narrowing the youth homeownership gap or merely helping to reduce existing property inventory.
Tan said this represented an important blind spot for housing policy, particularly as affordability pressures and changing preferences among younger buyers reshape demand.
On whether development approvals should be tightened to prevent further oversupply, he said supply controls and demand-side measures needed to be calibrated rather than applied as blanket national policies.
"Tightening approvals can address the supply issue, but it does nothing to directly clear the existing overhang," he said.
A broad tightening could also risk creating shortages in genuinely undersupplied micro-markets, such as areas close to public transport and priority growth corridors.
On the demand side, measures such as financing guarantees, stamp duty exemptions and the RM20 billion credit guarantee scheme could help buyers access existing homes and accelerate the absorption of unsold stock.
But Tan cautioned that demand-side incentives could also allow developers to maintain prices that might otherwise need to adjust to clear mismatched inventory.
He said a more targeted approach would be to align policy intervention with specific segments and locations.
"The more effective way and one implicit in the government's own framing, is targeting incentives at the segment level, such as stronger guarantees/financing support for the RM300,000 and below band, where genuine affordability is the constraint.
"Pair this with strict approval discipline in the over-supplied high-rise category, and the entire mechanism will become more effective," he said.
The challenge for policymakers, therefore, is no longer simply how to get Malaysians to buy more homes, but how to ensure that future housing supply is aligned with where people want to live, what they can afford and whether they can actually obtain financing.
Tan said with completed unsold residential stock already exceeding RM17 billion, failure to address those structural mismatches could leave Malaysia with a cycle of new supply being added while existing homes continue to accumulate as overhang.
National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong previously told Business Times that homes priced below RM300,000 are traditionally viewed as the most accessible entry point for first-time buyers but are increasingly failing to translate into actual purchases.
He said the current overhang demonstrates that Malaysia faces not simply a 'housing shortage', but a shortage of well-located, financeable and genuinely affordable homes. - NST
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